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Seignorage Wealth in the Eurosystem: Eurowinners and Eurolosers Revisited

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  • Hans-Werner Sinn
  • Holger Feist

Abstract

The rules laid down in Article 32 of the Protocol No. 18 on the Statute of the European System of Central Banks and of the European Central Bank of the Maastricht Treaty will significantly redistribute European seignorage income and hence the implicit entitlement to the € 352 billion stock of interest bearing assets which the central banks contributed to the currency union as of 1 January 1999. According to current plans, the redistribution will start by 1 January 2002. In terms of wealth equivalents and anticipating the Greek participation, Germany will lose € 30 billion (or 59 billion deutschmarks) and France will gain € 31 billion (or 202 billion French francs). Portugal will gain € 3.9 billion (or 792 billion escudos) and Spain will lose € 11 billion (or 1 879 billion pesetas). In per capita terms, Luxembourg, Finland and France will be the main winners with gains of € 1 309, € 627 and € 527, respectively, whereas a German will lose € 366 and a Spaniard € 287. The paper argues that this redistribution was not intended by the signing parties and recommends a revision of the Maastricht Treaty to correct the mistake.

Suggested Citation

  • Hans-Werner Sinn & Holger Feist, 2000. "Seignorage Wealth in the Eurosystem: Eurowinners and Eurolosers Revisited," CESifo Working Paper Series 353, CESifo.
    • Handle: RePEc:ces:ceswps:_353
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    References listed on IDEAS

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    1. Daniel Gros, 1998. "Distributing Seigniorage under EMU," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 51(17-18), pages 29-39, October.
    2. Hans-Werner Sinn & Holger Feist, 1997. "Eurowinners and Eurolosers: The Distribution of Seignorage Wealth in EMU," CESifo Working Paper Series 134, CESifo.
    3. Daniel Gros, 1998. "Distributing Seigniorage under EMU," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 51(17), pages 29-39, October.
    4. Seitz, Franz, 1995. "Der DM-Umlauf im Ausland," Discussion Paper Series 1: Economic Studies 1995,01, Deutsche Bundesbank.
    5. Dominik H. Enste & Friedrich Schneider, 2000. "Shadow Economies: Size, Causes, and Consequences," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 77-114, March.
    6. Sinn, Hans-Werner & Feist, Holger, 1997. "Eurowinners and Eurolosers: The distribution of seigniorage wealth in EMU1," European Journal of Political Economy, Elsevier, vol. 13(4), pages 665-689, December.
    7. Kenneth Rogoff, 1998. "Blessing or curse? Foreign and underground demand for euro notes," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 13(26), pages 262-303.
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    Cited by:

    1. Hans-Werner Sinn & Holger Feist, 2000. "The accidental redistribution of seignorage wealth in the Eurosystem," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 1(03), pages 27-29, October.
    2. Ainura Uzagalieva, 2005. "Fiscal Consequences of Monetary Integration within a Common Economic Area: The Case of Belarus, Kazakhstan and Russia," Post-Communist Economies, Taylor & Francis Journals, vol. 17(4), pages 399-424.
    3. Hans-Werner Sinn & Frank Westermann, 2001. "Why Has the Euro Been Falling?," CESifo Working Paper Series 493, CESifo.
    4. Jan Cimburek & Pavel Řežábek, 2008. "Hotovost v oběhu: světové trendy a situace v České republice [Currency in circulation: global trends and the situation in the Czech republic]," Politická ekonomie, Prague University of Economics and Business, vol. 2008(6), pages 739-758.
    5. Läufer, Nikolaus K. A., 2003. "Seignorage pooling of EMU, pool bias and seignorage change by the Euro," Discussion Papers, Series I 323, University of Konstanz, Department of Economics.
    6. Philipp Paulus, 2004. "The fiscal stability impact of monetary unions - looking beneath the Stability Pact debate," Otto-Wolff-Institut Discussion Paper Series 05/2004, Otto-Wolff-Institut für Wirtschaftsordnung, Köln, Deutschland.
    7. Hans-Werner Sinn & Frank Westermann, 2001. "Why Has the Euro Been Falling? An Investigation into the Determinants of the Exchange Rate," NBER Working Papers 8352, National Bureau of Economic Research, Inc.
    8. Jakob Korbinian Eberl, 2016. "The Collateral Framework of the Eurosystem and Its Fiscal Implications," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 69.
    9. Jacek Cukrowski & Manfred Fischer, 2003. "Seigniorage Wealth and Redistribution in Central and Eastern European Countries," Post-Communist Economies, Taylor & Francis Journals, vol. 15(1), pages 27-46.
    10. Hans-Werner Sinn & Holger Feist, 2000. "The accidental redistribution of seignorage wealth in the Eurosystem," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 1(3), pages 27-29, October.
    11. repec:bla:kyklos:v:54:y:2001:i:4:p:533-46 is not listed on IDEAS
    12. Feist, Holger, 2001. "The Enlargement of the European Union and the Redistribution of Seigniorage Wealth," Discussion Papers in Economics 16, University of Munich, Department of Economics.
    13. Louis Rouanet & Peter Hazlett, 2023. "The redistributive politics of monetary policy," Public Choice, Springer, vol. 194(1), pages 1-26, January.
    14. repec:bla:jcmkts:v:45:y:2007:i::p:999-1010 is not listed on IDEAS
    15. Holger Feist, 2001. "The Enlargement of the European Union and the Redistribution of Seigniorage Wealth," CESifo Working Paper Series 408, CESifo.

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